Tag Archives: covered california

Looming Problems for Insurance in California

The dust is settling on the first round of Obamacare, but the radical changes to our insurance markets and healthcare are far from over. In the years ahead, the California insurance market runs the risk of having less competition, with fewer products and higher prices that shortchange consumers, unless we change direction soon.

For a foreshadowing, look no further than Covered California, the health insurance exchange set up by the state to administer Affordable Care Act (ACA) plans.

Covered California celebrated the news that 1.4 million Californians signed up for new health insurance plans through the exchange, but this number is likely vastly inflated, considering what will certainly be duplication in signups and customers who will default on their premiums. Covered California conveniently left out the fact that it canceled nearly a million plans even though the president himself – the Obama in Obamacare – told states they didn’t need to cancel plans to be in compliance. The exchange’s decision left helpless consumers scrambling to find plans in the wake of the unnecessary and harmful decision.

Nine million Californians might lose their plans next year when the ACA mandates affect employer-sponsored insurance. That number might even be higher.

I won’t see Covered California trample on these millions of families like it did with the million individual-market consumers. That’s why I sued the exchange, to stop it from overstepping its authority and pulling the health insurance rug out from underneath a quarter of the state.

My suit also takes dead aim at the reckless spending and waste at Covered California. The exchange infamously squandered nearly $1.4 million on a video of ’80s fitness sideshow Richard Simmons prancing around on a stage with a contortionist in an attempt to reach out to millennials. I wish I was making this up, but I’m not. That $1.4 million is more than many Californians will make in a lifetime of work.

The exchange, only four years old, already projects a $78 million deficit in 2015/16 and more than $30 million the next year. Politicians can’t sit back and watch this happen. Without intervention, Covered California could come to the state’s general fund to bail it out or raise the monthly surcharge on health insurance plans so high that it will discourage people from buying insurance in the first place.

Obamacare has valuable components, such as the coverage for pre-existing conditions, but under the costly and ineffective administration of Covered California it veers toward disaster.

Meanwhile, attempts to amend California’s Medical Injury Compensation Reform Act, passed in 1975, could raise the liability limits for doctors. This would drive up insurance costs above even the inflated ACA-compliant plan costs and choke off the supply of medical care in the state, as doctors leave or limit the scope of their practices to manage their higher exposure.

Even worse, a proposition on the ballot in California this fall would give the Department of Insurance (DOI) authority over increases in health insurance plan rates. This may sound good for consumers, but it’s just the opposite.  As with any other product, it’s competition – not government control – that drives down prices.

Under this insurance commissioner, the DOI has hardly been the consumer’s friend. The DOI already pressured Anthem Blue Cross, one of the state’s largest health insurance providers, out of one critical state insurance market, leaving families with fewer choices to meet their healthcare needs. DOI is also slow to approve rate decreases that would benefit consumers. Rate decrease applications take between four and 12 months, leaving ratepayers hung out to dry while the bureaucratic process grinds on. Approvals of new products are slow to non-existent, meaning that Californians are robbed of advances that people in every other state use to protect themselves, their families and businesses, all while saving money. Putting this DOI in charge of health insurance would be a death blow to innovation and competition, leading to higher costs for everyone.

This is a wild time in insurance in California, and Californians need an advocate fighting for them, now and in the future. With the right ideas and right leadership, California can enjoy a future every bit as great as its past.

As Obamacare's 'Compassionate' Reality Sets In, Companies 'Cruelly' Cut Health Benefits

Employees of shipping giant United Parcel Service recently got an unexpected delivery. The company announced that it would stop offering health coverage to the spouses of 15,000 workers.

UPS’s workers and their families can thank Obamacare for this special delivery. And UPS isn’t alone. American businesses are discovering each and every day that the president’s signature law will raise health costs for them and their employees in short order.

In a memo explaining the decision to employees, UPS stated that increasing medical costs “combined with the costs associated with the Affordable Care Act, have made it increasingly difficult to continue providing the same level of health care benefits to our employees at an affordable cost.”

One day before UPS’s big announcement, the University of Virginia announced that it would cut benefits for spouses who have access to health care through jobs of their own. The rationale was similar.

Delta Airlines recently revealed that Obamacare will directly increase its direct health costs by $38 million next year. After taking into account the indirect costs of the law, the company is looking at a 2014 health bill that’s $100 million higher.

Increasingly, large employers who aren’t dropping spousal health benefits are requiring their employees to pay monthly surcharges in the neighborhood of $100 per spouse.

Many small businesses are dropping family coverage altogether because they expect that Obamacare’s new tax on insurers will be passed on to them in the form of higher premiums. One Colorado-based business received notice from its insurer that the tax would increase premiums more than 20 percent.

The story is similar in Massachusetts. One new report concludes that over 45,000 small businesses in the Bay State will see premium increases in excess of 30 percent. In all, more than 60 percent of firms in the state will see their premiums go up.

Last month in California, the largest insurer for small businesses — Anthem — declared that it would not participate in the state’s small-business health insurance “marketplace,” Covered California. Only two years ago, Anthem covered one-third of small businesses in California.

Anthem’s exit represents one less choice for consumers — and a sign that competition may not be as robust in the exchanges as the Obama Administration promised.

Small businesses are responding to these higher premiums by trimming their labor costs in other ways. That’s not good news for workers.

Seventy-four percent of small employers plan to have fewer staff because of Obamacare, according to a recent U.S. Chamber of Commerce survey. Twenty-seven percent are looking to cut full-time employees’ hours, 24 percent to reduce hiring, and 23 percent to replace full time with part-time employees.

One in four small companies say that Obamacare was the single biggest reason not to hire new workers. For almost half, it’s the biggest business challenge they face.

These findings are consistent with a recent Gallup Poll showing that 41 percent of small businesses have already stopped hiring because of Obamacare. Another 19 percent intend to make job cuts because of the law.

All this tumult in the labor market is fueled by more than the increase in premiums engendered by Obamacare. The law effectively encourages companies to cut full-time jobs.

Obamacare requires employers with 50 or more workers to provide health insurance to all who are on the job for 30 or more hours per week. The law originally called for this “employer mandate” to take effect in 2014, but the Administration decided in July to delay enforcement of the mandate until 2015.

Employers are responding by doing just enough to avoid Obamacare’s dictates.

Administrators at Youngstown State University in Ohio recently told adjunct instructors, “[Y]ou cannot go beyond twenty-nine work hours a week. . . . If you exceed the maximum hours, YSU will not employ you the following year.” A week prior the Community College of Allegheny County in Pittsburgh made a similar announcement.

Hundreds of employees at Wendy’s franchises have seen their hours reduced for the same reason.

Meanwhile, companies with fewer than 50 employees are thinking twice about expanding — and thus being ensnared by Obamacare’s requirement that they provide health insurance.

The cost of each additional employee could be staggering. A firm with 51 employees that declined to provide health coverage would face $42,000 in new taxes every year — and an additional $2,000 tax for each new hire. Providing coverage, of course, would be even more expensive.

Meanwhile, as private firms large and small grapple with Obamacare-fueled cost increases, one large employer — the federal government — has been quietly exempting itself from portions of the law.

Top congressional staffers like their current benefits under the Federal Employee Health Benefits Plan (FEHBP), wherein the government pays up to 75 percent of the premiums.

But the law requires those who work in lawmakers’ personal offices to enter the exchanges. And in many cases, staffers  make too much to qualify for health insurance subsidies through the exchanges. So they’d be facing a hefty cut in their compensation.

Fearing a mass exodus of congressional staffers from Capitol Hill, the Obama Administration fudged the law to permit lawmakers’ employees to receive special taxpayer-funded subsidies of $4,900 per person and $10,000 per family.

Yet only three months ago, Senate Majority Leader Harry Reid (D-Nev.) claimed that Congress wouldn’t make exceptions for itself.

President Obama no doubt knows that these congressional favors won’t go over well with ordinary Americans. So he’s called on his most popular deputy — former President Bill Clinton — to try to sell the law to the public once again.

But unless the former president can lower employer health costs with little more than the power of his words, his sales pitch will likely fall flat.

This article was first published at Forbes.com.